The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its
A)invoice price.
B)invoice price plus the purchase discount lost.
C)invoice price less the purchase discount taken.
D)invoice price less the purchase discount allowable whether taken or not.

Question

Quizplus · Accepted Answer

The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its invoice price less the purchase discount allowable whether taken or not. This means that the company is still recording the full invoice price as the cost of the inventory item, even if they were not able to take the discount offered by the supplier. This is a more conservative approach and ensures that the cost of the inventory is not understated.

The Use of a Discounts Lost Account Implies That the Recorded